Who Invests Better: Young Bucks or Old Dogs?

Much can be found online and otherwise exalting the importance of starting retirement investing at a young age. But often people don’t find the importance, motivation, or patience it takes until much later to start their investing journey.

Enter in real estate, quite possibly the sexiest avenue to invest, with the smallest barriers of entry for the types of returns it can produce. The income and potential earnings can produce a white collar nest egg for a blue color worker.

Add the appeal of finding good deals, negotiating, and fixing up your own assets. Thanks to the likes of larger than life personalities with network television sponsorship, flipping for huge profits continues to attract ambitious and venturing souls.

When it comes down to making an honest go of it, though, who makes a better investor…young ambitious go-getters or been-around-the-block old timers?

Let’s compare the two sides and see what your thoughts are as well:

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Young Bucks:

Positives
+ Time is on their side. The earlier you get started, the better. Plus, you can learn from the Old Dogs in the field what NOT to do, and cut out a lot of the learning curve if you connect with the right mentors.
+ Not afraid to hustle. Late nights, early mornings and plenty of energy drinks are the usual agenda for college students and recent grads. With little expenses, the drive, energy, and desire to succeed, new blood has the advantage of spending the resources they do have towards investing: their own time and efforts.
+ Less fear, less to lose: It’s easier to take chances when you’re failures and wins are tied to your own credit and accounts. Plus, no real career may be established yet, so leaving a comfortable position with benefits and tenor won’t be an issue.

Negatives
– Too young to care. The world exists between finals, parties, and a boyfriend/girlfriend/friends, investing is usually the last thing on their mind. 2nd and 3rd jobs may also take up any free time.
– No idea where to start or what to do. There are so many books, blogs, infomercials and gurus, the amount of information itself can be overwhelming. Unless you’ve had a relative or mentor to show you the ropes, getting started may be too intimidating and confusing.
– Lack of funds and knowledge: Even if a newbie investor has the drive, they may have little funds to start a marketing campaign, and little idea how to structure deals or evaluate deals. This can be crippling for those that are just starting out and don’t have mentors.

Old Dogs:

Positives
+ Have real world experience. Have the perspective outside of a philosophy and economics lecture to have lived through how markets actually operate. Experiencing actual market cycles has provided valuable education, most likely with losses and wins. Can more easily understand when, where and how to invest.
+ Established career. Not everyone wants to be out flipping houses. In fact, there’s many an argument why keeping a “real” job with W2 wages and buying real estate meanwhile is a smart way to retire wealthy. Have 401K’s and other retirement vehicles of which to draw funds for down payments, reserves, be a lender, etc.
+ Use Young Bucks in their business. Real estate investing can be taught, perseverance and winning spirit aren’t as easy. If you’ve been lucky enough to gain much RE experience, it will be easier to attract the Young Bucks to your business to help outsource that which you no longer have the energy or desire to do.

Negatives
– Time is not on their side. If starting later in life, the compounding of effect of money and flexibility to regain losses are lessened. But, starting at all is more important than never doing anything. After all, the average retirement is ghastly; simply adding one or a few rentals can make a significant difference to your balance sheet and income statement.
– More responsibility. Family, mortgages, tuition, bills, and other debts may have a stranglehold on the households’ finances, leaving little to nothing to use to invest.
– Lack of desire for change. It’s easy to get stuck in the mindset of “this is the way it used to be.” Gen X’s and younger are used to a fast paced, rapidly changing world where new technology emerges daily and old world philosophies are opaque in comparison to the search for creating a foothold for a career and life in today’s world. If Old Dogs aren’t willing to accept new laws, economic realities, and adapt where the game has changed, future success becomes limited.

When’s the Right Time?

If investing in real estate is important to you, it’s imperative to start taking action, to-day. The good news is, there’s plenty to go around and plenty of ways to gain assets and make income, regardless of age.

Better yet, the convergence of Young Bucks and Old Dogs can create winning dynamics for the betterment of each others profits and business.

What do you think? Do you think the young and tech savvy have a leg up or the older, wiser, and better funded have the advantage?

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14 Comments

Tracy, great article. The takeaway for me is that everyone has to potential to do well investing in real estate. Having capital is nice, so is being mechanical and having the time to do some of the maintenance yourself. As to the older set, I often set up a two pronged strategy with the first being their existing 401K and then when that is exhausted, they move on to income from their EIUL [or real estate]. Since the average person now spends almost 20 years in retirement, they can buy themselves the time for the second prong of their retirement strategy to mature.

Hi David, I agree having funds and a solid understanding are a great advantage. Distinctive strategies like you mentioned typically comes later as well, but can be learned before retirement, yes. Thanks for your comment!

That being said…somebody can be as tech savvy as the best of them but if they don’t know how to calculate a Cash on Cash return or even know what it means in evaluating where the best place to park your money is, you are destined to fail. (I’ve seen the craziest charts, etc, etc. with investors that get analysis paralysis when all you need is knowledge of the market, a pencil and a napkin.)

Last go around real estate “investing” (speculation) fiasco… I saw just as many Old Dogs as Young Bucks fail. I would have to say though that the Old Dogs I came across that failed miserably were a lot more stubborn then the Young Bucks in just moving on.

True about the analysis paralysis; you can have a green light on paper, but still be fearful if you don’t know how to take the next steps in the real world. You can’t buy experience or download a “wisdom” app 😉

Good point about getting stuck in old ways; I would agree that adaptability is imperative.

Nice article Tracy, I think it has little to do with age and all to do with your personal desire. If that is strong enough you will figure out the details. You had great points on all fronts, but all can be either utilized or overcome if your will to succeed and reach your goals is there. Nice idea for an article.

Thanks Glenn, agreed! We have some young and aggressive investors here that will retire before 40, others that take a slow and steady approach. The principles are the same, the desire and time make the difference. Appreciate your feedback!

I’ve been in the real estate business for a long time and I’ve learned that older investors tend to be better because of experience and wisdom. Also, many young investors come into the game with a certain level of arrogance, and it gets them into trouble.

With the current housing and economic conditions, the Young Bucks can certainly take advantage of low real estate prices and interest rates. However, so many Young Bucks have student loans or are unable to get a job. It will be interesting to see how these factors affect the Young Bucks when they become Old Dogs. If a Young Buck has a good job, has bought his first home, and is saving money, it’s hard to do any better than that.

That’s a good point Lee. Not everyone wants to be Top Dog in RE; even purchasing a home with ridiculously low interest rates and building equity (and hopefully paying off debt) can set the stage for financial success later in life.

Thank goodness RE can provide quick and long term returns, another thing I love about RE. But, wealth is built long term, riches are gained, and lost, easily. Old dogs have the life experience typically to see the forest through the trees. Good point!